Business Service Centers
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 10,300 business service centers in the US offer mailbox, parcel handling, and document processing services to individuals and business customers. The mailbox rental segment provides private mailboxes, packing, shipping, and notary services, and sells mailing and office supplies. The copy centers segment offers document printing, copying, and facsimile services, as well as word processing, and on-site computer rental.
Competition from Large Office Supply Chains
Business service centers have seen increased competition from large office supply store chains.
E-Commerce Drives Growth in Parcels and Returns
The growing popularity of online shopping has resulted in a surge in parcel growth delivery to businesses and consumers, accompanied by a surge in returns.
Industry size & Structure
The average business service center employs fewer than 10 workers and generates almost $2 million annually.
- The US business service centers industry (including copy shops) includes about 6,300 firms that operate over 10,300 facilities, employ 81,000 workers, and generate annual revenue of about $12 billion.
- The US industry is concentrated: the top 50 companies account for about 60% of revenue.
- Large companies include The UPS Store (5,100+ locations), FedEx Office and Print Services (2,200+ locations), and AlphaGraphics (250+ US locations).
- Many mailbox rental firms and copy centers/shops are franchises of large national chains.
Industry Forecast
Business Service Centers Industry Growth
Recent Developments
Oct 4, 2024 - Business Applications Rise
- The rate of US business applications, a key demand indicator for business service centers, increased in August 2024 compared to the prior month, according to the US Census Bureau. Three of the four US regions posted higher applications, with growth led by the West with a rise of 3.8%, followed by the South (+3.2%), and the Midwest (+1.3%). Business applications in the Northeast were down 0.7% in August compared to July. Of the 20 major industry sectors tracked by the Census Bureau, all but one posted growth in August, led by wholesale trade (+11.3%), unclassified (+10.8%), utilities (+9.2%), other services (+7.5%), mining (+7.3%), agriculture (+7.2%), construction (+6.3%), accommodation and food services (+4.6%), and administrative and support (+4.6%). With a drop of 6%, retail trade was the only major industry sector to see a decline in business applications in August.
- In September, Amazon’s CEO announced that starting January 2, 2025, the company’s corporate staff would have to return to the office full time, according to The Wall Street Journal. Since the end of the pandemic, hybrid work models have persisted, often due to management concerns that top performers might leave if they were required to spend more time in the office. However, as the labor market has tightened, the balance of power has shifted to favor employers, and some are eager to use their upper hand to require five days of in-office work. However, over the last year, the number of companies requiring five days in the office has fallen by 15%, according to Flex Index, which tracks the work policies of about 6,300 firms. A recent survey of CEOs by KMPG showed that 80% expect corporate employees to return to the office five days per week within three years. More firms returning to five-day in-office schedules could boost demand for business service centers.
- FedEx and UPS are courting small- and medium-sized businesses with rates that are typically only available to large firms that ship high volumes, according to Supply Chain Dive. The competition for smaller shippers’ business comes amid industry-wide softness in package volumes. While FedEx and UPS are competing more aggressively on pricing for smaller shippers, they have kept discounting to a minimum for their large-volume customers. Industry observers suggest small- and medium-size shippers should be prepared for a reduction in discounting when volumes bounce back, and the carriers will likely re-focus on per-package revenue.
- The business service center industry is expected to experience slower but steady sales growth in the coming years. The industry’s year-over-year sales increased by 4.2% in 2022 and 3.9% in 2023, according to Inforum and the Interindustry Economic Research Fund, Inc. Sales growth is projected to moderate to 2.3% in 2024, then rise nearly 3% in 2025. The industry will then see flat but steady average annual growth of about 3.5% through 2028, according to Inforum and the Interindustry Economic Research Fund, Inc.
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